This paper examines available evidence on Japan's wealth accumulation.
Time-series evidence over the last one hundred years indicates that the
phenomenon of extraordinarily high Japanese saving rate ia limited to the
high-growth era of 1965-1975. Micro evidence about consumption and aaving
by age can be more easily explained by the dynasty model than by the lifecycle
hypothesis. The infinite horizon neoclassical growth model, while
capable of generating the hump in the saving rate and explaining why it was
preceded by the rapid GNP growth in the post-war period, leaves unanswered
the question of why wealth accumulation in pre-war Japan was so slow.
Perhaps growth in pre-war Japan was hampered by harmful effects of misguided
government policies.
*Published:
forthcoming as ch. 10 in F. Hayashi, Understanding Saving: Evidence fromthe U.S. and Japan, forthcoming, MIT Press.
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